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Rover Films International V. Canon Films Notes

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Proper Film Ltd. is a company incorporated in Guernsey which had also concluded a contract with Thorn EMI for the exhibition of films in Italy, though in this case on television. On 9 April 1985 Thorn EMI had granted a licence to Proper to exhibit nine films on Italian television, with up to seven transmissions in each case, for a total licence fee of U.S. $1,800,000. Thorn EMI warranted that at the time of the delivery of each film they would have a good right to grant the licence for its transmission. Delivery was defined under the heading of "Availability" as follows: "Not earlier than two years from date of first theatrical release on the territory." The purpose of this postponement was of course to enable the films to be shown in cinemas for an initial period of two years without competition from screenings on television. We were told that in relation to the films in question the commencement of their availability for showing under the agreement would be about now, in 1988. The total licence fee was apportioned according to the estimated value of each film comprised in the agreement, similarly to what was subsequently done in the Rover contract, and the most important film was "Passage to India" to which $500,000 was allocated. One then comes to the provisions dealing with the payment of the total licence fee of $1,800,000. This was to be paid in three instalments, 20 per cent. on 15 May 1985, 30 per cent. on 30 September 1985, and the balance of 50 per cent., i.e., $900,000, on 30 September 1986. The first two instalments totalling $900,000 were duly paid in

1985. Then, as will be remembered, Cannon took over Thorn EMI by about 1 May 1986, and relations between the parties deteriorated, but on this occasion not due to the fault of Cannon. The Italian television rights in "Passage to India" had previously been granted to another exhibitor, with the result that Cannon had to procure the assignment or reassignment of the rights in this film. But Proper considered that Cannon had willfully disabled themselves from obtaining the rights to "Passage to India" and had evinced an intention not to be bound by the agreement. However, while the proceedings were pending, the second instalment of $900,000 became payable by Proper on 30 September 1986. In a letter of 25 September which also dealt with one of the instalments payable by Rover, the plaintiffs' solicitors announced that in the circumstances Proper would pay the
$900,000 into a joint account of the solicitors pending the outcome of the action. This was not acceptable to Cannon. On 3 October they treated the contract as terminated, relying both on Proper's

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